Takung Art (TKAT)

Business description

Based in Hong Kong, Takung Art Company provides a secure and easy way for art collectors and investors to acquire shared ownership in Asian and other fine art - including paintings, calligraphy, jewellery and precious gems - and participate in the booming international art market without fear of price manipulation and forgery.

Investment summary

Takung’s H118 results showed good progress in the number of new listings, with accompanying fees up 137% on the comparative period. Patterns in commission revenue reflect the previously announced shift in emphasis towards the retail market. In light of the disruption to online transactions in China as a result of contagion from problems in peer-to-peer lending, management has decided to pause new listings for Q3 and possibly beyond, with some associated internal restructuring. We have reduced our FY18 and FY19 forecasts accordingly. The group had $10.2m of net cash at the period end, giving it plenty of resource to ride out short-term volatility.

Last updated on 26/10/2018

Y/E Dec

Revenue (US$m)

EBITDA (US$m)

PBT (US$m)

EPS (fd) (c)

P/E (x)

P/CF (x)

2016A

19.1

9.8

9.5

65.53

1.2

N/A

2017A

12.9

(0.3)

(1.1)

(14.72)

N/A

N/A

2018E

12.5

(2.0)

(2.8)

(18.41)

N/A

N/A

2019E

13.5

(0.6)

(1.3)

(8.68)

N/A

N/A

Last updated on 17/10/2018

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Industry outlook

Based in Hong Kong, the business is effectively transacted in mainland China. The NYSE American listing adds credibility and reflects the broader global ambitions. Meanwhile, there is a very large market to address within the existing remit, with a proven and growing appetite for; art; shared ownership; trading; and collectibles, especially in relation to globally-recognised sporting icons. However, Chinese consumer confidence in online financial platforms is currently very fragile post the collapse of many peer-to-peer lending platforms and may take a while to rebuild.